2025 (2) TMI 279 - HC - Customs

Provisional release of seized goods of the Petitioner under Bond with security amount however without any Bank Guarantee - classification of imported self-drilling bars - to be classified under Entry No. 82.07 or 73.04 of the Harmonized Commodity Description and Coding System (HSN) classification - HELD THAT - The Court has perused the HSN classification entries as also the respective bills of entry and the description therein. The Court has also perused the judgment in Hind Global Enterprises 2017 (11) TMI 1125 - DELHI HIGH COURT . In the said matter the Coordinate Bench of this Court had observed that in cases of this nature the Petitioner ought to invoke the appellate statutory remedy. The parties ought to avail of the appellate remedy and not rush to the Court that too invoking the extraordinary writ jurisdiction. However in this case the Petitioner claims to be a regular importer of the seized goods. The seized goods have been lying with the Customs Department since May 2024. The present petition is also pending for the last six months. Relegating the Petitioner to the appellate remedy at this stage would cause further delays in the release of the seized goods itself. Ultimately the classification has to be decided by the Department. The Court has considered the total value of the goods and the amount of the Bank Guarantee. The calculated amount for the bank guarantee would be substantial and may almost constitute 70-80% of the value of the goods itself. The imposition of conditions being a discretionary matter in the facts of this case this Court is of the opinion that it would be just and fair that apart from the Bond which has been directed the Bank Guarantee to the tune of 30% of the differential duty be furnished by the Petitioner. Petition disposed off.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

• Whether the conditions imposed by the Customs Department for the provisional release of seized goods are excessively onerous and unjustified.
• Whether the petitioner should be required to exhaust the appellate remedy under the Customs Act, 1962, before approaching the High Court through writ jurisdiction.
• Whether the classification of the imported goods under the Harmonized Commodity Description and Coding System (HSN) was correct and whether the Customs Department's classification was justified.

ISSUE-WISE DETAILED ANALYSIS

1. Conditions for Provisional Release of Seized Goods

• Relevant Legal Framework and Precedents: The Customs Act, 1962, governs the import and export of goods, including provisions for the provisional release of seized goods. The case of Hind Global Enterprises vs. The Commissioner of Customs & Anr. was cited as a precedent, emphasizing the importance of exhausting statutory remedies before invoking writ jurisdiction.
• Court's Interpretation and Reasoning: The Court acknowledged the discretionary nature of imposing conditions for provisional release and examined whether the conditions were excessively burdensome. It noted that the requirement of a Bank Guarantee amounting to 130% of the differential duty was substantial, potentially constituting 70-80% of the goods' value.
• Key Evidence and Findings: The Court reviewed the HSN classification entries, the respective bills of entry, and the descriptions therein. It also considered the petitioner's status as a regular importer and the duration for which the goods had been seized.
• Application of Law to Facts: The Court determined that, given the petitioner's regular importation activities and the prolonged seizure of goods, it would be fair to reduce the Bank Guarantee requirement to 30% of the differential duty, in addition to the UT Bond.
• Treatment of Competing Arguments: The Customs Department argued that the petitioner misclassified goods to evade anti-dumping duties. The Court balanced this with the petitioner's argument regarding the onerous nature of the conditions and the financial impact of the prolonged seizure.
• Conclusions: The Court concluded that the conditions for provisional release should be adjusted to require a Bank Guarantee of 30% of the differential duty, alongside the UT Bond, to facilitate the release of goods while ensuring compliance with legal requirements.

2. Exhaustion of Appellate Remedies

• Relevant Legal Framework and Precedents: The Customs Act, 1962, provides an appellate mechanism for addressing disputes related to customs duties and classifications. The case of Hind Global Enterprises was referenced to highlight the importance of utilizing statutory remedies before seeking writ relief.
• Court's Interpretation and Reasoning: The Court recognized the general principle that parties should avail themselves of appellate remedies before approaching the High Court under writ jurisdiction. However, it considered the specific circumstances of this case, including the duration of the seizure and the petitioner's status as a regular importer.
• Key Evidence and Findings: The Court noted that the goods had been seized since May 2024, and the petition had been pending for six months. It also considered the Customs Department's acceptance of the provisional release request, with the dispute centering on the conditions imposed.
• Application of Law to Facts: The Court decided that relegating the petitioner to the appellate remedy at this stage would cause further delays in the release of the seized goods, given the specific facts and the prolonged duration of the seizure.
• Treatment of Competing Arguments: The Customs Department emphasized the need to follow the appellate process, while the petitioner argued for immediate relief through writ jurisdiction due to the financial impact of the seizure.
• Conclusions: The Court concluded that, in this particular case, it was appropriate to address the petitioner's grievance through writ jurisdiction, given the prolonged seizure and the need for timely resolution.

SIGNIFICANT HOLDINGS

• Verbatim Quotes of Crucial Legal Reasoning: "The imposition of conditions being a discretionary matter, in the facts of this case, this Court is of the opinion that it would be just and fair that apart from the Bond which has been directed, the Bank Guarantee to the tune of 30% of the differential duty be furnished by the Petitioner."
• Core Principles Established: The Court established that while statutory remedies should generally be exhausted before invoking writ jurisdiction, specific circumstances such as prolonged seizure and the petitioner's status as a regular importer can justify direct intervention by the High Court.
• Final Determinations on Each Issue: The Court ordered the provisional release of the seized goods upon the petitioner furnishing a UT Bond for the assessable value and a Bank Guarantee for 30% of the differential duty. The writ petition was disposed of with these terms, and any pending applications were also disposed of.